Possible Bearish Signals With Bright Smart Securities & Commodities Group Insiders Disposing Stock

In the last year, many Bright Smart Securities & Commodities Group Limited (HKG:1428) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Bright Smart Securities & Commodities Group

The Last 12 Months Of Insider Transactions At Bright Smart Securities & Commodities Group

Over the last year, we can see that the biggest insider sale was by the Executive Chairman, Mow Lum Yip, for HK$35m worth of shares, at about HK$1.85 per share. That means that even when the share price was below the current price of HK$2.90, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 2.0% of Mow Lum Yip's holding.

Insiders in Bright Smart Securities & Commodities Group didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Bright Smart Securities & Commodities Group Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Bright Smart Securities & Commodities Group. In total, Independent Non-Executive Director Wai Sun Szeto sold HK$1.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Bright Smart Securities & Commodities Group insiders own about HK$2.5b worth of shares (which is 51% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Bright Smart Securities & Commodities Group Insiders?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Bright Smart Securities & Commodities Group. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Bright Smart Securities & Commodities Group.

Of course Bright Smart Securities & Commodities Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.